This Transportation & Logistics (T&L) Insights series is based on research by Levvel, who joined the Endava family in 2021. The team surveyed over 500 US-based companies who procure transportation and logistics services internally and externally to get their views on their challenges, needs, and use of digital technology solutions.
While companies often perceive technology innovation to mean things like high-end robotics, artificial intelligence, and fully autonomous vehicles, there are many elements in the supply chain that can be modernized without requiring great effort or cost, while still providing the competitive edge T&L companies are looking for. In this series, we will present current industry challenges and how digital technology can help reduce friction, enhance efficiency, and provide a better experience for businesses and their customers.
THE CURRENT STATE OF PHYSICAL AUTOMATION IN WAREHOUSES AND DISTRIBUTION CENTERS
The mechanization of physical labor solves multiple warehousing, storage, and staffing problems in the T&L industry. Of course, when it comes to physical automation in warehouses and distribution centers (DCs) – as opposed to digital automation which utilizes mainly software and only small hardware components like near-field communication (NFC) chips – costs can seem high at first. But the return on investment (ROI) is even greater.
Worker injuries are at an all-time high. The US Bureau of Labor Statistics found that recordable illness and injury cases more than doubled from a decade ago, reaching 25,000 a year in 2020. The growth of e-commerce means warehousing and storage pressures will only increase. So, it makes sense that facilities are adopting physical automation tools to relieve the strain. Levvel’s research on the current use of automation tools helps to explain how automation tech is being implemented and why industry uptake is so uneven.
Physical automation can refer to many different types of machinery, but the two most common ones currently in use in warehouses and DCs are:
- Automated guided vehicles (AGVs): These operate along fixed routes and, at their simplest, include rail-guided carts and conveyors.
- Autonomous mobile robots (AMRs): These automated solutions are more adaptive and responsive to the surrounding environment and include palletizing robots, picking, classification, and loading robots, as well as autonomous transportation robots.
Our survey found that investment in these technologies is quite high in the US. Despite the upfront costs, physical automation is relieving human workers of laborious and dangerous tasks on the warehouse floor, as well as helping warehouse and DC managers solve staffing issues.
According to Levvel’s data, most companies have adopted basic forms of physical automation. Around 60% of the 560 transportation and logistics companies surveyed were utilizing AGV technology, specifically conveyors (37%), sortation devices (22%), and visual processors (22%). These tend to involve less upfront investment while still increasing efficiency.
Still, while highly automated companies who implement both AGVs and AMRs face fewer challenges across the board, just 40% have adopted AMR technology, such as palletizing robots (33%), picking robots (30%), or automated transport robots (19%) in addition to AGVs.
THE BENEFITS AND CHALLENGES OF PHYSICAL AUTOMATION
Among the greatest reported benefits of physical automation are fewer incidences of item damage, easier facility maintenance, and fewer safety hazards for workers. All challenges – from loss prevention to demand forecasting – were made easier by higher levels of physical automation.
However, one of the biggest challenges to implementing physical automation tools is cost. The upfront investment in these tools, the time and money it takes to tailor machines like robots to a specific warehouse floor, and ongoing maintenance costs are all important considerations. In some cases, older facilities simply don’t have room for physical automation tools and human staff. But for larger warehouses and DCs, the long-term savings are driving tech upgrades.
Another challenge companies face when adopting high-tech tools is the attraction and retention of staff capable of operating them. While physical automation tools are designed to reduce the physical strain on workers and even solve some staffing challenges, the real issue is the scarcity of skilled workers to manage and maintain these systems. Interestingly, although facilities with high physical automation capabilities reported “finding and retaining talent” as a major pain point for them, companies with only basic physical automation still found talent issues to be more challenging.
In the end, physical automation is a high-cost, high-reward solution that seems initially more fitting for larger warehouses and DCs. And since technology can be adopted piecemeal, each facility can make its own decisions regarding what tools to adopt first to solve their most pressing issues.
Read our other Transportation & Logistics Insights articles to learn more about how technology can help alleviate industry challenges.